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International Biorefining Conference Strategies To Address The High Costs of Operations & Maintenance Douglas Machon, Sr. Manager NAES Corporation

Bridging the Gap

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Doug Machon presentation at the 2011 International Biorefining Conference

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Page 1: Bridging the Gap

I n t e r n a t i o n a l B i o r e fi n i n g C o n f e r e n c e

Strategies To Address The High Costs of

Operations & Maintenance

Douglas Machon, Sr. Manager

NAES Corporation

Page 2: Bridging the Gap

A g e n d a

A B O U T N A E S

O & M S CO P E

O & M B E S T P R AC T I C E S

S T RU C T U R I N GO & M

Page 3: Bridging the Gap

D o m e s ti c O ffi c e sB u s i n e s s S e g m e n t s

B i o - M a r k e t s V i s i o nS t r a t e g i c D i r e c ti o n

A B O U T N A E S

Page 4: Bridging the Gap

E x p e r i e n c e B a s eA c ti v e P o r tf o l i o

N A E S O & MG e o g r a p h i e s

A B O U T N A E S

Page 5: Bridging the Gap

A g e n d a

A B O U T N A E S

O & M S CO P E

O & M B E S T P R AC T I C E S

S T RU C T U R I N GO & M

Page 6: Bridging the Gap

C o n c e p t

O & M S C O P E

I n c l u d e d

• Complete operational responsibility

• Routine, day-to-day maintenance

• Contractor Oversight

O&M

Plant Systems

Feedstock Receiving Production

C o s t - E ff e c t i v e C o n v e r s i o n o f F e e d s t o c k t o C o m m e r c i a l P r o d u c t s

Page 7: Bridging the Gap

C o n s u l ti n g P e r i o d( C R E A T E )

P r o F o r m a I n p u t s

B u d g e t D e v e l o p m e n t

S u p p o r t N e g o ti a ti o n s

R e v i e w P l a n s

P r e - C o m m e r c i a l O p e r a ti o n s

( G E T R E A D Y )

R e c r u i t / H i r e S t a ff

D e v e l o p P r o g r a m s

P u r c h a s e S p a r e s

S u p p o r t E P C S & C

C o m m e r c i a l O p e r a ti o n s( E X E C U T E )

S a f e

C o m p l i a n t

C o s t - E ff e c ti v e

H i g h P e r f o r m i n g

P r o j e c t P e r i o d s

O & M S C O P E

Page 8: Bridging the Gap

M e a s u r e m e n t

O & M S C O P E

H o l i s t i c : D e l i v e r V a l u e i n A l l A r e a s

Page 9: Bridging the Gap

A g e n d a

A B O U T N A E S

O & M S CO P E

O & M B E S T P R AC T I C E S

S T RU C T U R I N GO & M

Page 10: Bridging the Gap

P h i l o s o p h y

O & M B E S T P R A C T I C E S

Establish O&M “Principles” & Management

Processes

Develop & Maintain Strong O&M-Focused

Infrastructure

Develop, Implement, Execute, and Improve Disciplined & Effective

Programs

Continually Measure, Assess, and Improve

F o c u s o n t h e F u n d a m e n t a l s

Page 11: Bridging the Gap

P r o g r a m sO b j e c ti v e s

C o n ti n u o u s I m p r o v e m e n tP r o c e s s e s

O & M B E S T P R A C T I C E S

Participation in industry activities/conferences Leadership of technology users groups Sharing of Lessons Learned and Best Practices Plant and fleet assessment programs Access to plant/technology database Preferred vendor lists Group pricing agreements / purchasing power Always drive value; Always get better

Page 12: Bridging the Gap

B a n k a b l e P r o j e c t s

O & M B E S T P R A C T I C E S

Risks

Experience

Feedstock

Off-Take

ProductEPC

Technology

Operations

Page 13: Bridging the Gap

A g e n d a

A B O U TN A E S

O & M S CO P E

O & M B E S T P R AC T I C E S

S T RU C T U R I N GO & M

Page 14: Bridging the Gap

O w n e r / O p e r a t o r A l i g n m e n tD e c i s i o n P o i n t s

S T R U C T U R I N G O & M

Cost vs. production (see below)

Fixed price vs. cost transparency

Typical scope vs. customization

Plant objectives vs. alignment of incentives

Roles of owner/operator in budget development

Roles of owner/operator in operating plan

IDENTIFY WHAT’S MOST IMPORTANT: Validating first-of-its-kind technology?

No frills people and process management?

Turning around an underperforming asset?

Plant as a training ground for future plants?

Operations experience to achieve financing?

Strategic partnership to extend w/licensing?

Need to gradually develop O&M capability?

STRUCTURE O&M TO THOSE NEEDS:

C o s t V s . P r o d u c ti o n